Market Roundup
• US Markit Mfg PMI Final Jul 52.0, 52.1 previous.
• US Construction Spending MM May 0.0% vs 0.3% forecast, -0.7% previous.
• US ISM Manufacturing PMI Jun 57.8 vs 55.2 forecast, 54.9 previous.
• US ISM Manufacturing Employment Index Jun 57.2 vs 53.3 forecast, 53.5 previous.
• Atlanta Fed raises US Q2 GDP view to 3% from 2.7% calculated on June 30.
• US June new vehicle sales soft, Japanese carmakers up.
• Unnerved by markets, ECB rate setters wary of lifting QE easing bias in July- sources.
• BoE’s Vlieghe: early rate hike is bigger risk- Independent.
• BoE to tackle "weaknesses" in how banks offer credit to consumers.
• FSB's Mark Carney warns G20 growth at risk from reform fatigue.
• Merkel: prepared to work with new French govt to develop EZ, such as by creating a currency fund.
Looking Ahead - Economic Data (GMT)
• 01:30 Australia Retail Sales MM May 0.2% forecast, 1.0% previous
• 04:30 Australia RBA Cash Rate Jul 1.50% forecast, 1.50% previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.0328 levels and currently trading at 1.0358 levels. The pair has made session high at 1.0368 and hit lows at 1.0352 levels. Euro declined against the dollar on Monday as the dollar was bolstered by higher U.S. government bond yields and a private report that showed manufacturing activity increased to its strongest level in nearly three years. The greenback just came off its worst quarter since 2010 last week as overseas central banks have signalled they are considering whether to begin reducing monetary stimulus in light of evidence their local economies are doing better. Earlier Monday, the Institute for Supply Management said its index of national factory activity rose to 57.8 last month, the highest reading since August 2014. This upbeat factory report propelled benchmark 10-year Treasury yield to 2.346 percent, the highest in nearly seven weeks. A closely watched index that tracks the dollar against six major currencies. was 0.6 percent at 96.192, rebounding from its lowest level since early October seen on Friday. The euro retreated from its highest in more than a year against the dollar last week. It was last down 0.5 percent at $1.1369.Currency trading activity was muted ahead of the U.S. July Fourth holiday. U.S. financial markets will close early on Monday and will be shut on Tuesday.
GBP/USD is supported in the range of 1.2900 levels and currently trading at 1.2928 levels. It reached session high at 1.2965 and dropped to session low at 1.2928 levels. Sterling declined against the dollar on Monday as sterling was weighed down by stronger dollar and poorer-than-expected data from Britain's manufacturing sector which led investors to think twice about whether the Bank of England will raise interest rates this year. The latest purchasing managers' index (PMI) showed British factory activity grew much more slowly than forecast in June, with export orders rising at the weakest pace in five months. Activity fell to 54.3 from a downwardly revised 56.3 in May a three-month low and below all forecasts in a poll. Last week, the pound recorded its best weekly performance against the dollar in almost eight months, climbing almost 2.5 percent after BoE Governor Mark Carney said a rate rise was likely to be needed as the economy came closer to full capacity. Sterling fell to as low as $1.2932, down 0.7 percent on the day, before recovering a little ground to trade at $1.2939 by 1955 GMT. It had hit a six-week high of $1.3030 on Friday on bets that the BoE would hike interest rates in the coming months.
USD/CAD is supported at 1.2943 levels and is trading at 1.3306 levels. It has made session high at 1.3312 and lows at 1.2963 levels. The Canadian dollar declined against its U.S. counterpart on Monday as the greenback strengthened across the board after U.S. manufacturing data boosted expectations that the Federal Reserve would raise interest rates. The Institute for Supply Management (ISM) said its index of national factory activity rose to 57.8 last month from 54.9 in May. Economists polled had expected a reading of 55.2. The reading adds to encouraging signs that the U.S. economy rebounded strongly in the April-June quarter. Following the data, the Atlanta Federal Reserve raised its forecast for second-quarter GDP to a 3.0 percent annualized rate from its previous forecast of 2.7 percent. On Friday, data also showed that the U.S. economy grew at a 1.4 percent annual rate in the first quarter, less slowly than previously estimated. Oil prices resumed their longest stretch of daily gains in more than five years after data pointed to moderating U.S. crude output, though analysts said news of rising OPEC production could cap the rally. The Canadian dollar was last trading at C$1.3006 to the greenback down 0.04 percent.
AUD/USD is supported around 0.7628 levels and currently trading at 0.7655 levels. It hit session high at 0.7660 and made session lows at 0.7644 levels. The Australian dollar declined against US dollar on Monday as the Australian dollar came under pressure after U.S. manufacturing activity increased to its strongest level in nearly three years, driving expectations of faster rate hikes in coming months. An index of national factory activity tracked by the Institute for Supply Management rose to 57.8 last month, the strongest reading since August 2014, driving U.S. 10-year yields to their highest levels in seven weeks The figures allayed some concern over the pace of economic recovery that had left traders skeptical of the Federal Reserve's stated plan of raising U.S. rates once more before the end of 2017 and another three times next year. In a welcome sign for the RBA, data out on Monday showed Australian job advertisements climbed for a fourth straight month in June confirming the recent marked improvement in the official measures of labour demand. Australian job advertisements climbed for a fourth straight month in June, confirming the recent marked improvement seen in the official measures of labour demand. A monthly survey by Australia and New Zealand Banking Group showed total job advertisements climbed 2.7 percent in June, following a 0.4 percent increase in May. Investors will closely watch the Reserve Bank of Australia's (RBA) monthly policy meeting on Tuesday where it is sure to keep the official cash rate at a record low 1.50 percent.
Equities Recap
European shares rose on Monday, starting the second half of the year on a stronger footing with oil stocks and banks leading a broad bounce off lows hit last week on concern over tightening monetary conditions.
UK's benchmark FTSE 100 closed up 0.9 percent, the pan-European FTSEurofirst 300 ended the day up by 1.24 percent, Germany's Dax ended up 1.2 percent, France’s CAC finished the day up by 1.5 percent.
The S&P 500 and Dow Industrials moved higher on Monday, with the Dow hitting an intraday record as energy and bank stocks gained, but continued weakness in the technology sector pulled the Nasdaq lower.
Dow Jones closed up by 0.06 percent, S&P 500 ended up by 0.2 percent, Nasdaq finished the day down by 0.5 percent.
Treasuries Recap
U.S. Treasury yields rose on Monday, with two-year yields touching their highest in more than eight years after U.S. manufacturing data boosted expectations that the Federal Reserve would raise interest rates again this year as other central banks shift toward tighter monetary policy.
Benchmark 10-year yields hit a nearly seven-week high of 2.353 percent, while 30-year yields touched their highest in nearly three weeks of 2.873 percent. Five- and seven-year yields hit their highest since early May of 1.941 percent and 2.199 percent.
Commodities Recap
Oil rose more than 2 percent on Monday, resuming its longest stretch of daily gains in more than five years after data pointed to diminished U.S. output, though analysts said news of rising OPEC production could cap gains.
Brent crude futures closed up 91 cents, or 1.9 percent, to $49.68 a barrel. The price rose 5.2 percent last week for the first weekly gain in six.
U.S. crude futures closed up $1.03, or 2.2 percent, to $47.07 a barrel, an almost one-month high. U.S. crude futures trading volumes were low a day before the U.S. Independence Day holiday.
Gold slid to a seven-week low on Monday and headed for its biggest one-day loss since November as the dollar rebounded and 10-year U.S. Treasury yields climbed, weighing on appetite for non-interest bearing bullion.
Spot gold was down 1.6 percent at $1,221.42 an ounce by 2:30 p.m. EDT (1830 GMT), after falling below the 200-day moving average and reaching $1,218.83, the lowest since May 11.
U.S. gold futures for August delivery settled down 1.9 percent at $1,219.20. Trade will halt early on Tuesday for the U.S. Independence Day holiday
